Income Tax Amendments Applicable to AY 2020-21 (FY 2019-20)

Some important amendments
to consider while Filing Income-
tax Return
for the
AY 2020-21 (FY 2019-20)
Shah Jain & Associates
Chartered Accountants

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INDEX
1. Rebate of income-tax in case of individuals [section 87A] .................................................. 3
2. Surcharge .................................................................................................................................3
3. Rates of income-tax in case of Domestic Company ............................................................. 3
4. Standard Deduction from Salary [section 16]........................................................................4
5. Rate of Depreciation [New Appendix I of the Income Tax Rules] ........................................4
6. TDS............................................................................................................................................5
7. Special provision for payment of tax by certain companies - Minimum Alternate Tax
(MAT) [section 115JB].................................................................................................................... 6
8. Capital gains exemption on profit on sale of property used for residence in certain
cases [section 54]........................................................................................................................... 7
9. Determination of Annual Value and deductions from Income from House Property
[section 23 and 24] ......................................................................................................................... 7
10. Electronic facility to be provided by certain persons [section 269SU]............................ 8
11. Buy Back of shares of listed company [section 115QA]................................................... 8
12. Mandatory Filing of Income Tax Return..............................................................................9
13. Prosecution - Increase in limit [section 276CC].................................................................9
14. Furnishing statement of Financial transaction - Removal of limit [section 285BA]........9
15. Penalty for furnishing inaccurate statement of specified financial transaction [section
271FAA] .........................................................................................................................................10
16. Claim of Refund .................................................................................................................. 10
17. Deduction of interest paid on loan used for purchase of electric vehicle [section
80EEB]...........................................................................................................................................10
18. Online filing of application under section 195 .................................................................10
19. Deduction for affordable housing ..................................................................................... 10

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1. Rebate of income-tax in case of individuals [section 87A]
A rebate is available to a resident individual assessee, if his total income does not exceed
INR 5,00,000. The amount of rebate shall be 100% of the income-tax payable or INR
12,500, whichever is less.
2. Surcharge
Surcharge will be levied on Income-tax in case of Individuals, HUF, Association of Persons,
Body of Individuals and Artificial Judicial Person as follows:
Nature of Income
Income
upto INR
50 Lakhs
Income
more than
INR 50
Lakhs upto
INR 1
Crore
Income
more than
INR
1 Crore
upto INR
2 Crore
Income
more than
INR 2
Crore upto
INR
5 Crore
Income
more than
INR
5 Crore
Short Term Capital Gain
u/s 111A & Long Term
Capital Gain u/s 112A
NIL 10% 15% 15% 15%
Income other than above NIL 10% 15% 25% 37%
3. Rates of income-tax in case of Domestic Company
Particulars Rate of Tax*
In case of Company whose turnover in the previous year 2017-18
does not exceed INR 400 Crore
25%
In case of Company who has opted section 115BA 25%
In case of Company who has opted section 115BAA 22%
In case of Company who has opted section 115BAB 15%
Any other Domestic Company 30%
(*Rates are exclusive of Health & Education Cess and Surcharge)

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4. Standard Deduction from Salary [section 16]
Standard Deduction from Salary from FY 2019-20 is INR 50,000 or the amount of salary
received, whichever is less.
5. Rate of Depreciation [New Appendix I of the Income Tax Rules]
As per the Notification No. 69/2019-Income Tax dated- 20th September, 2019,
amendments have been made in sub item (2) and paragraph (ii) of sub item (3) of Item III
relating to Plant and Machinery in Part A relating to Tangible Assets which are as follows:
Block of Assets Depreciation
Rate
(2) (i) Motor Cars, other than those used in a business of running
them on hire, acquired or put to use on or after the 1st day of April,
1990 except those covered under entry (ii);
(ii) Motor Cars, other than those used in a business of running
them on hire, acquired on or after the 23rd day of August, 2019 but
before the 1st day of April, 2020 & is put to use before the 1st day
of April,2020
15%
30%
(3) (ii) (a) Motor buses, motor lorries and motor taxis used in a
business of running them on hire other than those covered under
entry (b);
(b) Motor buses, motor lorries and motor taxis used in a business
of running them on hire, acquired on or after the 23rd day of
August, 2019 but before the 1st day of April, 2020 & is put to use
before the 1st day of April,2020
30%
45%

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6. TDS
a) TDS on Interest other than "Interest on securities" [section 194A]
The limit for TDS on Interest other than Interest on Securities is increased to INR 40,000
(INR 50,000 for Senior citizens) where payer is
 Banking company or any bank or a banking institution
 Co-operative society engaged in the business of banking
 Post Offices
b) TDS on Payment in respect of LIP [section 194DA]
Any person responsible for paying to a resident any sum under a life insurance policy,
including the sum allocated by way of bonus on such policy, other than the amount not
includible in the total income under clause (10D) of section 10, shall, at the time of payment
thereof, deduct TDS at the rate of 5% on such payment (i.e. TDS on income component
and not on gross maturity value), if the amount of such payment or aggregate amount of
such payments exceeds INR 1,00,000.
(Under section 10 (10D), maturity proceeds received under a life insurance policy, other
than few policies mentioned therein, are exempt from tax.)
c) TDS on rent [section 194I]
Tax is now required to be deducted at source in case the payment of rent by certain persons
to a resident in case the rent exceeds INR 2,40,000.
d) TDS on cash withdrawals [section 194N]
Every registered banking company, cooperative society engaged in the business of banking
or post office:
- is required to deduct TDS at the rate of 2%,
- on cash withdrawal made by a person during previous year on or after 1
September 2019,
- if the aggregate cash withdrawal from all accounts with one bank exceeds INR 1
crore

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e) TDS by certain individuals or HUF [section 194M]
- Individual/ HUF whose books of accounts are not subject to tax audit as per section
44AB (a)/(b) during the immediately preceding financial year are liable to deduct TDS
under 194M.
- The same shall be applicable only if any sum is paid to a resident for carrying out any
work (including supply of labour for carrying out any work) in pursuance of a contract, by
way of commission (not being insurance commission referred to in section 194D) or
brokerage or by way of fees for professional services in a financial year exceeds INR 50
Lakhs.
- Tax is deductible at the rate of 5%, at the time of credit of such sum or at the time of
payment of such sum in cash or by issue of a cheque or draft or by any other mode,
whichever is earlier.
- Individual/HUF covered under section 194M shall be able to deposit tax deducted using
PAN and shall not be required to obtain TAN
- Individual/ HUF if required to get Books of Accounts audited, then section 194M is not
applicable to them i.e. they have to deduct TDS as per section 194C, 194H and 194J.
7. Special provision for payment of tax by certain companies - Minimum
Alternate Tax (MAT) [section 115JB]
- Income-tax rate under section 115JB(1) has been reduced from 18.5% to 15%.
- Further, a new clause has been added to 115JB(5A), as per which a person who has
exercised the option referred to under section 115BAA (Tax on income of certain
domestic companies) or section 115BAB (Tax on income of certain new domestic
manufacturing companies) would not be liable for MAT under section 115JB.

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8. Capital gains exemption on profit on sale of property used for residence
in certain cases [section 54]
- As per section 54, to claim exemption from Long Term Capital Gains on sale of
residential property, the assessee has to use the amount of capital gains for purchase or
construction of one residential house in India in accordance with the provisions of the
said section.
- Now, the assessee has the option to purchase or construct two residential houses
instead of one to claim exemption from Long Term Capital Gains on sale of residential
property, provided capital gains does not exceed INR 2 crore.
- If the assessee avails the above mentioned option during any assessment year, he shall
not be subsequently eligible to exercise the option for the same assessment year or any
other assessment year i.e. the assessee can exercise this option only once in his
lifetime.
9. Determination of Annual Value and deductions from Income from House
Property [section 23 and 24]
- Presently, an assessee is required to pay income-tax on a notional basis if he owns
more than one self-occupied house property.
- From now onwards, assessee will get exemption to two self-occupied house
properties owned by the assessee and thereby no need of paying tax on notional rent.
- However, the interest deduction is limited to INR 2 lakh for both the self-occupied
house property in aggregate.

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10. Electronic facility to be provided by certain persons [section 269SU]
- Every person carrying on business, whose total turnover or gross receipts exceeds
INR 50 crore, in immediately preceding previous year, has to provide electronic
facility for accepting payments, in addition to the facility for any other electronic mode of
payment already provided to customers by such person.
- The prescribed electronic modes are Debit Card powered by RuPay, UPI, BHIM-UPI,
UPI QR Code, BHIM-UPI QR Code.
- Penalty of INR 5,000 per day for failure to comply with above provisions.
11. Buy Back of shares of listed company [section 115QA]
- Section 115QA has been made applicable to all the companies, including listed
companies.
- The provisions of section 115QA doesn’t apply when all the below mentioned conditions
are satisfied:
 The company is listed on recognized stock exchange; and
 The company has buy-back its shares; and
 The public announcement has been made on or before 5th
July, 2019; and
 The public announcement has been made in accordance with the provisions of
Securities and Exchange Board of India (Buy-back of Securities) Regulations,
2018
- Post amendment, buy back will be taxable at Company level and exempt in hands of
shareholders in all cases

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12. Mandatory Filing of Income Tax Return
- Following persons have to mandatorily file Return of income:
 A person who has deposited cash aggregating to more than INR 1 crore in one or
more current bank account
 A person who has incurred foreign traveling expense aggregating to more than INR 2
Lakh for himself or any other person
 A person who has incurred electricity expenditure aggregating to more than INR 1
Lakh.
- Also person, having total income before claiming deduction/exemption u/s 10(38), 10A,
10B, 10BA, 54, 54B, 54D, 54EC, 54F, 54G, 54GA and 54GB more than INR 2,50,000,
has to mandatorily file Return of income.
13. Prosecution - Increase in limit [section 276CC]
- Prosecution proceedings can be initiated against a person, not being company, for
failure to furnish in due time return of fringe benefits under sub-section (1) of section
115WD or return of income under sub-section (1) of section 139, only if outstanding tax
is more than INR 10,000
- Also, while determining outstanding tax, credit for prepaid taxes, self-assessment taxes,
advance taxes will be given
14. Furnishing statement of Financial transaction - Removal of limit [section
285BA]
- Earlier, reporting of specified financial transaction was mandatory only when the
aggregate value of transactions exceeded INR 50,000.
- The said limit has now removed, hence going forward all the specified financial
transaction needs to be reported irrespective of amount involved.
- Scope of persons who have to report such specified financial transaction has been
enhanced by including any other person as may be prescribed.

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15. Penalty for furnishing inaccurate statement of specified financial
transaction [section 271FAA]
Penalty of INR 50,000 is leviable in case of furnishing of inaccurate information by any
person as referred to in section 285BA.
16. Claim of Refund
It is now proposed that refund can be claimed only through filing return of income under
section 139 of the Act.
17. Deduction of interest paid on loan used for purchase of electric vehicle
[section 80EEB]
- Individual eligible to claim deduction for interest paid on loan utilised for purchase of
electric vehicle.
- Loan can be obtained from bank or specified NBFC or any other specified banking
institution.
- Amount of deduction not to exceed INR 1,50,000 per annum.
- No other deduction allowed for such interest expense under any other provisions of the
Act.
18. Online filing of application under section 195
Application for withholding tax certificate from tax officer would now be filed in online mode
in manner as may be prescribed.
19. Deduction for affordable housing
- Definition of affordable housing has been aligned with definition provided under GST Act.
- Additional deduction of INR 1,50,000 available for interest paid on loan to acquire
affordable house subject to fulfillment of certain conditions

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Address
601, 6th
Floor, Rajesh Rayon Bhavan,
Opp. Kakad Market, Kalbadevi Road,
Mumbai - 400002
Contact Details:
CA Priyank Shah : +91 9773568946
CA Amit Jain : +91 9773398194
CA Bharat Jain : +91 9920496581
Email ID:
office@shahjain.in

Income Tax Amendments Applicable to AY 2020-21 (FY 2019-20)

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